A Political Scenario for Successful Reform

Abstract

Abstract Pessimism about reform in Japan is understandable, but it can blind one to the potential for change. Low growth, technology, and other megatrends are producing splits both among various interest groups in the LDP support base as well as within each of them. In the absence of good productivity, aging is leading to unpopular tax hikes on working-age people. Technology and climate change are causing big splits among Japan’s leading corporations. The bureaucracy is increasingly divided between reformers and defenders of vested interests. The rise in non-regulars is forcing change in the labor movement. While the Liberal Democratic Party (LDP) seems to have a lock on power, that power rests not on popular support, but on the fecklessness of the opposition. Those disenchanted with the LDP increasingly stay home. The LDP has to fear that, if the opposition gets its act together, it could again lose power over issues of reform and revival, as in 2009, this time in a lasting fashion.